My life in the center of the world -- musings on my family, community (local, global, physical and virtual), people and more. Oh and of course, a few words on tech related start-ups, within the context of living in the ulimate start-up with humble goal of repairing the world. Venture backed by over 3,000 years of history, thought, culture, and angst.
By Jacob Ner-David

November 18, 2012

When I left Israel, there was a momentary ceasefire in the "low level" violence being directed at southern Israeli towns by various militia in Gaza. I purposely say militia instead of "terrorists" because as the world is now aware, we are in a state of war with those in Gaza who have been using psychological warfare on and off for many years. Terrorists and terrorism can sometimes elecit a sense of martyrdom for a cause, to perpetuate the idea of the underdog. War, on the other hand, is simply war. And at times armies, acting on behalf of a nation, commit war crimes, attack civilian populations with no just cause.

This is the situation we are in. Hamas has been at war with Israel for many years, we are only know fully acknowledging that reality.

During a ceasefire in the war, Israeli political and military leadership took a decision to act upon a war room priority of killing Jabaari, the Hamas military chief. Similar to the US decision to hunt down and kill Osama Bin Laden, who also was a political and military leader.

I personally think the world would have been a better place if we had brought Bin Laden forth to stand tribunal for his crimes, and sentence him to a life imprisonment pondering his fate. Yes, I am against the death penalty at all times, even for someone like Bin Laden. When there is a ticking bomb, however, we do not have that moral luxury -- and so at times we are justified in acting. Was that the case with Jabaari? Did our political and military leaders feel he was a ticking bomb, destined to commit further war crimes if we did not act in time? Perhaps. And so maybe there was a justified moral compromise. I do not know.

What I do know is that taking out of the equation one of the symptoms, without treating the core issues, is not a morally acceptable strategy.

If we have momentarily defused a bomb, wonderful -- but we must follow it up immediately with an intensive move to cure the disease, not only the symptoms. Gaza has been, since the ill-planned pullout, a stew of hatred breeding intense hatred. Is all of that Israel's "fault?" Of course not, Gaza shares a border with Egypt, under both Mubarek and his successor Musri that border has been closed -- and so are the sea, air, and other land borders controlled by Israel. Israel helped create a State of Gaza, with it's own political and military leadership. We are at war with that State -- but at some point we will want to live at peace.

And of course there is also the slowly developing State of West Bank, which we are fighting but is taking shape regardless. Will these two states merge? Maybe, but not our call. We need to make our peace with both of them, with an intensity matching or exceeding that of war.

When I was in Silicon Valley I visited with an Israeli friend whose company was recently acquired, and as a result he moved with his family to Silicon Valley to see through the integration of hs company into the acquiring entity. When I asked him how he was doing on a personal level, he said he only has one complaint about his new life in Silicon Valley..."that he has nothing to complain about." Only an Israeli would complain about there being nothing to complain about!!

And yet his statement represents the success of the bubble that Silicon Valley culture created, and within that bubble all is good. Can the Silicon Valley bubble be pierced? Popped? Sure, we have seen it happen. But that bubble is largely an economic one -- and those living at the "borders" of that bubble are somewhat indifferent, and when the bubble bursts are not so directly affected. Israel for many years has been behaving like a bubble, and those attempting to burst our bubble were operating with toothpicks going up against a super industrial strength bubble -- with a very thick skin. Poke us all you want, we don't feel it -- until the tooth picks get sharper, and pierce deeper (rockets in Tel Aviv). We cannot afford in Israel, or in neighboring States, for our bubbles to burst. We will not bounce back, as does Silicon Valley.

On my way back to Israel, an Israel that has woken up to the state of war it really is in, I think how we need to pursue peace at the same level of intensity that we fight our wars. We have finally started to stand and fight in a war that has been raging for some time. I pray that we can finish the war as quickly as can, and then start fighting for peace.

I bless us that we bring Israel to the point where Israelis can complain that there is nothing to complain about -- and then we will know we really did create our own version of Silicon Valley.

February 01, 2012

Recently I read through the biography of Steve Jobs, authored by the wonderful Walter Isaacson, CEO of the Aspen Institute (as you may know, I have the deep honor of being a Henry Crown Fellow of the Aspen Institute, and have had the unique pleasure of interacting with Walter over the past ten years, and greatly admire his ability to capture complex lives in written form). Walter takes the reader on a page-turning odyssey of the man Steve Jobs and the companies he created (Apple, Next, Pixar, and then Apple again). We are offered a rare glimpse into the life of one our generation’s most mythic figures.

As an owner back in 1986 of a first generation Mac , all the way to being the CEO of a company in 2012 developing a service running on the iOS platform, I did not need the biography to tell me that Steve Jobs had a gift for bringing technology to the masses. The question is, at what price? From the opening that Walter gives us into the life of Steve Jobs the man, not only the myth, I come away with a very bad taste in my mouth. While I knew that Jobs was a driven personality, it is only reading the book that I realize how much he sacrificed upon the alter of creating cool technology. As readers of the book or avid followers of Job “trivia” know, Steve Jobs the man fathered a child and then for almost ten years ignored that child, his daughter Lisa. Even after acknowledging her, and bringing her into his orbit, their relationship was not a happy one. While there are a few scenes in the book that tell us of Jobs ability to love family, you get the feeling that in the “family v. company” race there was never a doubt what would win.

My own father, who thank God is alive today and will remain so for many years to come, was one of the pioneers of the computer age, helping to create COBOL, building massive mainframe systems in the 60s and 70s, and helped create the forerunner of the internet in networks such as BITnet and Arpanet. But my father did not see the vision of a computer in every house that people like Steve Jobs (and of course Bill Gates) saw back in the 70s and 80s. My father felt that computers were tools, not toys. My father’s cohort were happy to leave computers in the hands of data processing centers, crunching difficult numbers in the pursuit of national defense, health systems, and in general making the world a better place, but from a “behind the scenes” paradigm. My father, before retiring to academia in 1970, created a start-up (yup, it’s in the blood) called Compumedic Controls, which harnessed powerful computing to help centralize medical records. Growing up my father was very present, although also very dedicated to his adopted persona of being a professor at a public university. And we (my sister and I) were very present in the professional life of my father (and mother, also an educator). He brought us to office many times, letting me play with the punch-card machines, teaching us basic programming skills. When my father had conferences, we often attended together with him and my mother. It was a lifestyle that treasured family, and integrated it into professional life. We did not feel a tension between the two paths, but rather an integrated approach to life.

No coincidence is it that Jobs adopted family name is all about the job, the workplace, the professional life – the side of oneself that is extremely ego driven. For Steve Jobs parents, their last name was a curiosity, for Steve it was destiny that the job would always come first, and would have primacy in his life. Isaacson does not tell us of a Steve Jobs lovingly showing off his kids at the office – what you hear about is a man cutting a family vacation short because of a defective antenna in the iPhone 4 (and not clear how cutting the vacation short helped that problem…). In fact, it was only reading the biography that I knew Jobs had kids at all! And this is one of the most high-profile tech leaders of the generation. I am not asking for people like Jobs to live out all of their life in the public eye – but on the other hand he was a role model, and along with great power comes great responsibility (as Peter Parker’s Uncle Ben so eloquently told him).

I know it is not cool to speak ill of the dead, and so I prefer to take step back, and analyze the clash between Job[s] and family from a more removed and also personal point of view. As a serial entrepreneur, I am often faced with needing to choose between another hour (or three ) of work, or spending time with kids, raising them, together with my life partner, Rabbi Dr. Haviva Ner-David, and also wider family circle, community, and the world. As the father of seven children, ranging in age from ten months to 18 years, those demands on my time are a daily challenge. But it is a challenge I relish. I don’t think one can “do it all” if the job demands operating at a Jobsian level of intensity -- almost necessarily means family will lose out – and that is a terrible example to set for the world. For me, it actually taints the products that Jobs created, knowing they are the result of a philosophy that so prized work and professional pursuits above family and community. No wonder that Steve Jobs never engaged in social change and/or philanthropy. In fact it was Bill Gates who brought forth a much healthier and ethical approach, understanding that technology and business success should be used for tikkun olam, repairing the world. Even someone like Warren Buffet, who does not feel he personally can contribute with his own skillset to fixing the world, had loudly announced that the bulk of his wealth will go to repairing the world, and has urged others to do so.

Recently there has been a rash of a new type of program for entrepreneurs and start-ups called accelerators. There are several well-known programs in the US, including Techstars and YCombinator. In Israel we have some new ones as well, including the Elevator (where I am a mentor). These are wonderful jump-starts for an entrepreneur, and I know I would have benefited greatly 17 years ago had I started out my entrepreneurial career going through such a program – heck, I am sure I would benefit today. These programs, however, were set up with one “type” of entrepreneur in mind – one who comes with no strings attached, no responsibilities outside of their start-up. It is expected that they go “all in,” devoting all their energy to making the start-up work. Most of these accelerator programs are for a three-four month period, cramming together an MBA like education, the networking that normally would take years of conferences, and intense brainstorming on a 24/7 pace.

On the side one is expected to whip together at least a working prototype if not a launch able product. Oh, and the expectation of the accelerator is that you can drop everything and physically be where the accelerator is located. In the US this could mean getting on a plane and locating yourself thousands of miles from where you live (there are Techstars in Boulder, Seattle, Boston, and New York – so there are some geographic options…). No provision is made for family inclusion, or support. The cash invested in base on a per-founder “living expenses” model, or as one program calls it, “beer money.” What is someone with kids to do? Just pick up and leave the family for 3-4 months? I haven’t see any discussion in the blogosphere around this point. For me it is glaring.

I recently heard about a new program for Israeli start-ups to introduce them to the hard charging environment of Silicon Valley. The program literally picks up the leadership of start-ups and houses them in together Palo Alto for three months (in a group home in Palo Alto, sounds a lot like a frat house). In order to participate in the program the CEO must be present in Palo Alto for the full three months (I can understand why – I just see it from the viewpoint of an entrepreneur with a life beyond the start-up). The program is wonderful, just what is needed for newbie and experienced entrepreneurs. But why 3 months straight? Why not think in advance of the father or mother of young children, the CEO with a sick parent, or some other type of life responsibility. Do we really want to exclude all of these people from the best programs? And more importantly, the lack of exposure of these issues leaves a hole in the training of CEOs in the making, and perpetuates the Jobsian example of complete dedication to “the job.”

I reject the idea that it is either Job or Family. I believe you can “have it all”—but with different rules and expectations. It will not be perfect, and there will be moments where one or the other wins out. But three months of taking a break from life is beyond the pale, it exceeds the red lines. For some it may be workable – but for many not, placing a strain on family that cannot be morally justified by the potential success of a start-up (remember, 9 out of ten start-ups fail, even if accelerators have better stats, there remains a good chance the start-up will not succeed). Where is the happy balance? I do not know how put my finger on the exact point along the spectrum. I just now that the life example of Steve Jobs is not the path to healthy family or soul. May he and his memory be blessed for the joy he did bring to the world, through Apple, Pixar, and then Apple again, and may we learn how to take the good and leave behind the not-so-good from the life lessons of Steve Jobs.

May 18, 2011

This past week I spent 7 hours in a “sulha.” A sulha is an middle eastern conflict resolution tradition, an attempt to bring together parties with severe differences, probe the issues, and leave in a different place than when the sulha started.

What caused the need for this sulha? Email. Huh? Yes, you were expecting some family honor issue, or a deep ideological divide. Nope. The sulha revolved around a series of emails in a start-up I am part of (I am the Chairman of the Board) which spiraled out of control, and almost caused the company itself to run off track. What happened? A simple misunderstanding, a word used in a context that was out of place.

Email is a valuable medium. Email is based on thousands of years of written communication. The written word in general has a core place in our Western tradition. In fact, I am part of a people who are literally called the “people of the book,” and the written words take center stage in our life. But on the other hand, it is people who read the book, aloud, and discuss the written word on a regular basis. The written word on its own is dry, unforgiving, lifeless.

In our modern culture we are in tension between constant communication that is anything but real soulful communication. Over 100 years, in ever speeding evolution, we have moved from the Pony Express, to telegraph, to fax, to email, to SMS, to instant message, and then disparate variations (Facebook messages, wall posting, Twitter tweets, 4square check-ins, and more). But what about talking? Somehow we keep inventing new ways to avoid actually talking to one another.

I broke my entrepreneurial teeth 15 years ago helping to disrupt the telecommunications industry (in co-founding Delta Three [NASDAQ: DDDC]). The first business conference I ever spoke at was “Talking on the Net,” the pre-cursor to the successful VON series of conferences sponsored by my good friend (and now business partner) Jeff Pulver. Then we were sure that we were part of a wave of technology advancement that would allow people to talk more. We believed that “free” speech (or at least very low cost) would make the world a better place. I still believe that, and have seen how in using technology to avoid speaking we sometimes “communicate” at each other, rather than with each other.

Oh, we don’t think we are avoiding speaking. We think we are communicating. But when we rely too much on written words, we lose the meaning. In the Jewish tradition the written word never stands alone, and even though is said to be the word of God, it is the oral interpretive tradition that takes precedence in Jewish law. It is the conversation of the study hall that talks through the issue raised in the written tradition.

A lesson I shared in the sulha process last week was one I learned from a CFO I worked with many years ago at a company called Omnisky. His name is Larry, and he had a “2 email rule.” Put simply, if an issue did not get resolved with 2 emails being exchanged, the parties needed to at least speak to each other by phone, if not meet in person. Not sure what Larry would say about tweets, but I am sure he would not be in favor of conversations based on tweets running back and forth. Sure, for very short staccato type messages Twitter/SMS is fine. “Where are you?,” “I am here,” and so on. But even then…we lose some much in not hearing the other person.

At Omnisky, which acquired a company I started called NomadIQ, we were pioneering mobile email (a distant competitor at the time was a start-up called RIM with a device called Blackberry, we didn’t think they would make it, we were writing software for the Palm OS platform….). We did not imagine then the rapid back and forth communication that would soon emerge with Blackberry, Iphone, and now Android. Push email was still cumbersome then – you had to pull down your email (like walking out to the curb to check if the mail came yet).

Have advances in technology helped? Sure, I enjoy being able to be out with my family for the day but still be “on-line” for important email messages, releasing me from needing to sit in an office or next to my laptop. But a blackberry (or an iphone) or even a laptop is no solution for a phone call, or for an in-person meeting when possible.

Recently, in a meeting with a senior person at a large mobile operator, I was told that they “value voice at zero.” It’s all about data. Well, at some levels I agree that voice is a data application. But she (and her team) is forgetting that voice is THE application. All other applications are but a distant cousin of voice. And we do expect service providers to helps us talk to one another, not only at one another. Posting a thought on Facebook is cute, but it doesn’t rise to level of intellectual conversation, even with healthy comments.

Too often meaning is lost when we rely only on the written word, especially today when the written word comes so cheap (when you wrote in stone you gave it a lot of thought before etching out those words…).

I know we cannot turn back the clock, and people will not suddenly put down their mobile email device of choice, SMS and Twitter will continue to be influential medium. But perhaps we can all remember the Larry rule, and if it looks like a conversation is going off course, pick up the phone. Talk it through. Try it, it works.

March 28, 2011

What could inspire me to blog after such a long "rest?" (a deserved rest, I might add, what with new daughter, 6 other children to parent, marathon to run, companies to start, etc.)

Well, the color of money. No, not the funky colors of Israeli monopoly money, but the good old greenbacks of US of A, a land where anything is possible, including raising $41 million dollars for a start-up that had NOT EVEN LAUNCHED A PRODUCT. And they are proud, check the press release here. And proud they should be -- showing off the heights of lunacy in America today.

Yes, I am talking about the recent news item that the legendary VC firm Sequoia Capital led a $41 million round for the company known as Color. What does Color do? I am not quite sure, but thanks to my new friend Tal Givoly I was alerted to this review. Check it out for a laugh, in a sentence I will take this in a more serious direction...

In searching through the web for clues as to how this insanity happened, I stumbled across an interview Color founder Bill Nguyen gave to Business Insider. You should read it in its' entirety (here), but let me just dwell on a few choice lines. Before I do, let me expose something about my relationship to Bill -- we don't know each other, but have bounced around similar circles. When I co-founded Delta Three, he founded OneBox, both playing in VoIP space. When I was focused on mobile email/apps in founding NomadIQ, Omnisky, 2bAnywhere, he was doing Seven. And so on. Bill has made a LOT more money than I have at this start-up game, but like me still loves it. So he is somewhat of a kindred spirit. OK, now back to our regularly scheduled programming.

In the interview, Bill is asked many questions. But what astonished me was not all the nothing he had to say (after all, there is no traction, no growth, no rave reviews, just a lot of money sunk in). What astonished me are the following:

"There's not much we can do about the money we raised, I'm not giving any of it back."

Wow.

And then when asked for the "business model" behind Color, he said:

BN: Advertising through the app. We're going to build a intelligent system that allows businesses to participate with their customers. So when you walk into a restaurant and you use Color, and they're also customers through a self-service Web interface -- or actually a self-service iPad interface -- every time you walk into the restaurant, your [first] name will show up with your picture. The maitre d' or receptionist will know who you are, they'll be able to welcome you, they'll know the last time you were here, they'll be able to see pictures if you took them here. They'll be able to provide you better service than they've ever before, that's going to drive up their revenue by increasing repeat business because we always want to go back where we feel welcome.

BI: They would pay you for that capability?

BN: Exactly

Double wow. He actually said his business model is....someone seeing your picture on an iPad when you walk into a retaurant. And someone paying for that. Heck, I would pay for that not to happen.

I am not going to enter the debate as to whether we are in a bubble or not...for another time, maybe after it bursts (oops, gave myself away there). But regardless this story is fascinating.

On the one hand, I love the fact that serial entrepreneurs can command massive investment on the basis of....whatever Color is, or will be. On the other hand, the VC community has forgotten that they are supposed to be professional investors. How much is Bill himself investing? That's what I want to know. After all, he has a shekel or two. If the answer is zero, than something is very wrong with this situation. Here we have a very wealthy tech guy, being given more money that 40 standard start-ups combined to develop...a photo sharing app that claims it is something else?

This sounds to me like some serious laziness on the part of Seqouia, and their tag along co-investor Bain Capital. At least they should give Bill a slap on the wrist for the line about not giving the money back -- or perhaps this is Bill's twisted way to improve the Palo Alto economy, by robbing from the rich and giving to the...rich?

Anyway, if anyone out there is listening, please help me understand the Color of Money.

August 29, 2010

In general I respect David Pogue from the The New York Times, who has been writing a blog/column tackling technology subjects and making sense of new products and features for the common folk (which usually I consider myself). But two days ago Mr. Pogue took on a subject dear to my heart, and a significant part of my entrepreneurial career, that of internet telephony (as a founder of Delta Three I helped pioneer the field in the late 90s).

According his recent post, entitled "Google Shakes It Up Again With Free Phone Calls", Pogue believe that there was something new and innovative in Google's announcement that one can now click on a contact in Gmail and call a "real" phone number, whether land line or cellular. According to Pogue, this revolutionary new service from Google, called "Voice Calls from Gmail" (wow, that's catchy....much better than what I coined, PC2Phone) allows you to, get this, make free phone calls from your computer. WOW! Except, well, that was news about 13 years ago, commercially available 12 years ago. And the free calls to phones in North America -- that was pioneered by a now defunct company called Dialpad about 11 years ago!! (And then copied by Delta Three, Net2phone, and all the other IP Telephony players in late 90s).

The big difference -- we could only talk about making money from advertising, Google actually knows something about it. Google gives away Gmail and the basic storage because the incremental costs for them are low and they can monetize to some degree. But still way over 95% of their revenue comes from search. Would be nice to know what revenue Gmail actually generates (I mean even the accompanying ads).

Oh, and by the way, Mr. Pogue, even if you couldn't be bothered to research the history of IP Telephony (or at least call my good friend Jeff Pulver who in 2 minutes could have given you the history, much of it he was responsible for...) you at least could have acknowledged that Skype's revenues are over 86% due to SkypeOut, but most of that not calling North America. SkypeOut makes most of their revenues from people calling places where tariffs are still relatively high.

And Skype has a nice embedded community of users, years of experience. Google's weak attempt is not much of a threat.

So what happened with Mr. Pogue? Well, either he was taken to a really nice dinner by a VERY nice Google PR person, or he simply just didn't know that that there is nothing new here. Same same.

Seems to me that Google is running out of steam and innovation, and is reaching for low hanging fruit to convince people that they are still the Kings of the net. But I think they are looking a lot like MSFT. And by the way, Mr. Pogue, good old MSFT came out with a similar service in...2001. (see this story from CNET (remember them)

May 26, 2010

In general I am against paying for conferences, whether for myself or for one of our portfolio companies. I think there is enough sponsorship money out there to cover costs plus a profit for organizers. Especially if they think creatively like my friend Jeff Pulver, the folks at TedxTelAviv, and the producers of DLD.

But when the annual announcement came out calling for companies to apply for the "Red Herring 100" award, I encouraged AttracTV to apply. And lo and behold they were accepted...and were informed they had the right to showcase the company at the Red Herring conference in Paris being held today and tomorrow. And the catch...to claim that right need to pay 1500 euro. But still I encouraged to move forward, because the company needs exposure to more VCs, and I [mistakenly] thought would be a good venue.

We arrived yesterday for the pre-event cocktail party and already there were bad vibes. A room set up for hundreds held many twenty people. OK, I said, most Europeans can simply come in the morning for the official conference. but this morning was no better. In a salon in a very fancy shmancy hotel in Paris, that could easily hold 500 people, there were maybe 50-75 people. In an opening speech, Alex Vieux, longtime producer of ETRE and RedHerring online magazine and conferences, spoke about the gloom and doom of venture ecosystem in Europe. He went on and on for 20 minutes about how terrible things are, how no deals are getting done, and everything is grinding to a halt.

Now, Zeev Holtzman, founder of Giza Ventures in Israel, has recently said the same thing about the reality of the Israeli venture scene. But of course there are contrary opinions.

My questions today are more for conference organizers...if you pressure start-ups to pay high fees to present, but then do not deliver a quality and quantity of audience, should you refund money? What responsibility should conference organizer bear? Is there not an implied contract?

I for one believe that Mr. Vieux should refund registration fees to all the start-ups who came. Not to compensate them for their travel, lodging, time, but at least what is directly in his control. After all, he told us several times this morning how wealthy he is...giving back 100K euro would not kill him. And he certainly does not deserve to profit from such a awful turn-out. Most of the start-ups today presented to other start-ups, which is always fun but does not have to take place in a five star hotel in Paris.

March 02, 2010

OK, so it's been some time since I have posted to my blog, but even that admission seems so archaic (in Internet time). These days one has the option of tweeting, Facebook status update, Facebook "note," good old email blast, etc. Of course, newspapers do still exist. And my wife, Rabbi Dr. Haviva Ner-David recently started a column in the Jerusalem Post weekend edition. But her articles also appear on-line. And she also writes a column in an on-line only publication called Zeek.

Can all of these options enter the mainstream? I don't think so. What will need to happen is a form of leveling, with Twitter and similar services acting as notification engines, Facebook as a semi-closed circle of "friends," and blogs staying what they were intended to be: "my" voice out into public domain. Blogs are essentially a diary exposed to the world. Some tend to use the medium for more professional reasons, others more personal, and some (like me) a combination.

In one of the companies I am involved in, AttracTV, we are starting to see this all come together. AttracTV developed a platform for "Vidgets," which are applications that run as overlay on video being streamed. Amongst the first vidgets we released were Twitter and Facebook applications. And we see the different usage patterns, around the same content, playing out in real time. We also operate our own proprietary chat application, which is a very closed community (only people watching that content).

But as we know, 99% of the population reads, listens, and watches. They do not create. Facebook has nudged those statistics a bit, and while FB have not released stats yet, I would guess less than 10% of FB users actually update their status on regular basis. Thus the key in moving forward is how do the 99% process the Tweets, FB status updates, blog postings, news flashes, etc. Jeff Pulver has over 350,000 followers to his tweets. How many read each one? (especially given at the rate that Jeff puts information/thoughts/opinions out there...). What does it mean to have 350,000 followers? I subscribe to Jeff's blog, but I couldn't deal with his never ending tweet stream, turned it off hours after I opened up my twitter account.

If Twitter is smart and wants to continue to be the channel they are, they will need to give the 99% of us the tools to manage the avalanche of information. I assume they (and hundreds of third party developers) are hard at work at it right now.

In the end, we will remain the same human beings we are right now. Most of us are passive, some of us are active. The active ones will seek out the best ways to make their voice heard.

January 10, 2010

Ok, so I was wrong [so far] about Facebook...they have turned it into a sustainable platform and profitable business. Will Twitter succeed as well? Based on random interviews below...doubtful. But as I say, I have been wrong before.

December 17, 2009

Just before we start to shut down for the holiday season (here in Israel we started "early," as Hanukka started last week...) want to admit where I was wrong--looks like Facebook is well on the road to becoming a serious cash machine, like it's cousin Google.

According to recent reports, besides passing 350 million active users, Facebook is on a run rate to hit $1 billion in annual revenues. In 2009 it is reported they already will exceed $500 million. While we [at present] do not have info on how much Facebook is spending, should be safe to assume less that their revenues, and they are starting to not only be profitable but generating some serious cash reserves.

I need to admit that I was wrong. I did not think Zuckerberg and team had it together to translate massive usage into business, but I guess the usage was just to massive to get it completely wrong...slowly but surely they are monetizing that user base (again, little visibility into numbers, but seems to be from display ads, virtual goods, and very focused ad campaigns).

I still do not think Facebook is any kind of new operating system, and if a better FB comes along they could be left in the dust. While my 11 year old is a FB addict, my almost 9 year old doesn't use it at all [yet]. If a better FB comes along to capture her attention, FB is threatened. They have no intellectual property, no defensible technology advantage. "Just" massive momentum, which may make them too big too fall. But then again, where is Myspace today? My 11 year has never even tried it.

Bringing this back to our home court, the venture community in Israel, we need to think more about what it means to scale up, and monetizing success. Facebook, I still maintain, is the exception to the rule. Now lets see if Twitter can start to generate Google-like revenues....

September 22, 2009

See this interview with my good friend Jeff Pulver on the "State of Now" and the "Real Time Internet." Oh, and by the way, Jeff thinks Twitter is worth billions. Now. Well, good thing Jeff is public that he is a shareholder, we wouldn't want him to be objective about this company...